We’re in something of a downturn.
WTF happened here?
Answer: a medium-sized correction. No one really knows what the value of these crypto assets is. Hence, a 24/7 extremely liquid market collectively decides. This market is made up mostly of new speculators who are mostly unfamiliar with an asset that has never existed before in human history.
Almost all of the value today is made up of speculation. I think some large-cap assets have a higher level of non-speculative value — for example, Monero in darknet market sales, BTC and BCH in internet gambling and people like me who earn their salary/living in those assets…there is a level of fixed demand at any price that will support a certain price and market cap. But that level is very small as a percent of the overall market today.
What is that level exactly? How much of the price is speculation and how much is usage and inelastic demand? How much SHOULD be speculation? And could we reasonably expect more speculation to increase the price in the short/medium/long term? Would increasing price increase usage, through massive media exposure to cryptocurrencies in an era of better infrastructure for new users? Or does decreasing price at high enough magnitudes wipe out waves of potential new support? (Not unrealistic, most people I spoke with about bitcoin in 2015 thought it “went out of business” with the 2013-2014 crash).
Those problematic questions are more open to the market’s interpretation and hence we see these types of corrections in crypto-land.
It’s nothing new, and I’m surprised that this crash still sees $10k BTC, $1.5k BCH, and >$800 ETH….all of these values were unheard of highs only a couple of months ago. Might have some more dives to come.
I would say buying opportunity…relative to last week, sure!
But it’s important to keep in mind that next week could be twice as good of a “buying opportunity,” as could the week after that. Crypto as a whole demonstrated it could store over $800 billion in value for a couple of days. If usage continues to grow while government managed currencies continue to languish, we can expect $800 billion in value (or more) to be stored in crypto for much longer periods of time.
I bought my first BTC for $892 on Coinbase in 2013, and watched it tumble to sub $200s in 2014 and then languish under $300 for the better part of 2015. A big part of my commitment to crypto is personal / political aversion to the debt-fueled economy of bamboozlement that dominates today’s world economy, which helps me care less about what normal people refer to as swings. For readers that do not share these principles, appreciating the speculative nature of new digital commodities is highly advised 😉
Since I’m 100% crypto, I won’t be changing anything about my buying or selling patterns. It’s just a matter of watching the fireworks ¯\_(ツ)_/¯
At the time of this post, 1 Bitcoin traded for $9,990 and 1 Bitcoin Cash traded for $1,530 on GDAX.
Haven’t bought bitcoin yet? Use my referral link to sign up with Coinbase, and we’ll both get $10 in bitcoin when you purchase $100.